Will the staffing shortfall at hotels ever go away?

Key takeaways

  • Hotels in the United States still have a quarter million fewer workers than before the Covid-19 pandemic
  • Rising wages and stabilizing hours have not been enough to close this persistent gap
  • More hotels are using platforms like Instawork to staff a variety of roles, with steady pay rates and the option to make permanent hires

Hotels have been a fast growing source of demand for flexible labor since the service economy reopened. And it makes sense – hotels need in-person hourly work in a variety of roles, and their needs can fluctuate widely with vacation times, local events, and even the weather. Moreover, this summer was another big one for the hotel industry, as consumers tapped out the extra savings they accumulated in the early years of the Covid-19 pandemic.

But there's another reason why hotels are keen on flexible labor: they have a huge employment gap to close. Perhaps more than any other industry, hotels need help with staffing, and they probably will for a long time to come.

The rebound that never arrived

It's not news that the leisure and hospitality sector lost a lot of workers early in the Covid-19 pandemic. Lockdowns cut employment in the sector in half, and it's only now recovering to where it was before the pandemic began. The recovery has extended to caterers, restaurants, and bars, many of which are small businesses that had an especially hard time during the pandemic. But it hasn't happened to the same degree for hotels:

The government's food services and drinking places category now has roughly as many jobs as it did before the pandemic began. Yet the accommodation industry – which used to move in lock step with food services and drinking places – has been behind since the middle of 2020. In fact, employment in accommodation seems to have plateaued despite enormous demand; revenue for hotels in the United States set an all-time record in 2021 and came close again in 2022.

This is puzzling, since there's not much scope for hotels to replace workers with machines or to adopt other productivity enhancements that haven't already been in use. Some have moved to automated check-in or used robots to deliver room service meals, but the vast majority of cleaning, food preparation, and customer service still needs to be done by people.

The continued shortfall of employment is even more mysterious given that average hourly pay has risen just as much at hotels as at caterers, restaurants, and bars in the past several years:

Adding to the mystery, average weekly hours for hotel workers this summer have been pretty much the same as in the summer of 2019. For whatever reason – revenge travelers trashing rooms? greater preferences for remote work? – not as many people want to work in hotels. And so the hotel industry is still short about a quarter of a million permanent employees, with no immediate prospects for getting them back.

Finding workers in a new way

Hotels have been using platforms like Instawork to bring in workers on flexible schedules for a wide variety of roles. Housekeeping shifts have been rolling out this year across our platform and have quickly grown into one of the top categories at hotels. These figures are based on shifts in three of our more mature markets:

Taking out housekeeping, there's a pretty even mix between front- and back-of-house roles. Despite the increases in wages shown above for permanent employees – about 5% on average – hourly rates on the Instawork platform are pretty close to where they were a year ago for most roles:

Local market conditions have affected pay, though, with higher-skill roles like line cook and bartender the most likely to be affected:

We have seen some changes in average hourly pay since we began rolling out housekeeping shifts, but we expect these to even out as volume increases:

Not surprisingly, some of our business partners have been using the Instawork platform as a recruiting tool, too. They're evaluating our Pros who work shifts on a recurring basis, and then they're trying to hire the ones who offer the best fit. These hotels have had some success, but they've also told us that some Pros simply prefer to do hotel work on a flexible schedule. And this may well be the way forward as the industry grapples with continuing staffing challenges.

Realtime metrics

These metrics, derived from data aggregated across the Instawork platform, compare the two weeks starting 8/3/2023 to the previous two weeks. To control for the overall growth of the Instawork marketplace, only shifts involving businesses that booked shifts in both periods are included:

  • $0.19 drop in hourly pay
  • 0.5% point drop in share of short-notice shifts
  • 0.6 hours drop in hours per existing worker

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